New Morningstar Risk Tolerance Questionnaire

I am pleased to confirm the new Risk Tolerance Questionnaire will go live on 16th July 2011.

Morningstar’s primary goal and driving force has always been to equip investors and their advisers with accurate, timely and insightful data, research and tools that enable them to make better, more informed investment decisions.

The BBC Panorama programme 13 June 2011 – ‘Can you trust your bank’, in our view highlighted the problem with transactional/sales driven so called ‘advice’. The programme’s focus on poor ‘advice’ through illustrations of individual behaviour within a number of banks highlights the need and value of truly independent advisers, who establish a detailed knowledge of their clients and a long term non-transactional focused relationship.

Financial Advisers, powered by Morningstar, can be certain that they are supported by a business that has their client’s investment interests at the forefront. Morningstar provide your business with a scalable robust investment process, one that you can be confident of and your clients happy with. In mid July we will enhance that process with the release of our latest risk profiling tool which has taken into account the FSA’s good practice guidance. It’s important to make clear that tools should provide structure and promote consistency within your business but they are still just an aid to an adviser’s investment process. After all, the client is buying into your advice proposition and the role of Morningstar is to facilitate that.

Our latest RTQ goes further than ever in helping advisers and their clients understand the risk a customer is willing to take as well as their capacity for loss. The Morningstar Risk Profiling Tool, has been created by Ibbotson Associates (part of the Morningstar Investment Consulting business), who are also responsible for creating the asset allocation guidance models.

Clearly, the recent review of wealth management firms, where 14 out 16 firms posed a high or medium-high risk of detriment to their customers, tells us it’s not just the banks that have issues executing best advice practices and underlines the importance of having a robust investment process in place while being supported by a truly independent business partner such as Morningstar.